The bank (or institutional entities lending capital in general) has to be certain you are of good health and that you will survive until your mortgage ends. If you died or became seriously sick/disabled, you wouldn’t not be able to do your job and meet your mortgage payment requirements. The outcome would have been foreclosure. This could make life more complicated for all at the financial institution. They are in the lending sector, not the property sector. They have no problem with lending you the capital, making their gains from interest and charges, and moving on. What they do not wish for is to all of a sudden possess a previously owned property. You do not strive for it, too. It will be a period of distress or grieving, and won’t be eager to work out complex financial procedures. It would certainly not make an upsetting situation any easier if your closest ones ended up not having the house. That’s why lots of mortgage lenders need life insurance.
If one, as the policyholder, holds a life insurance that equals the amount of the remaining loan amount, then if they die/fall seriously ill/ become disabled, the payout of the insurance would clear the mortgage in total. Their family can keep the house, and those workers at the financial institution will continue with their usual business without needing to go after the person’s offspring for capital.
It sounds confusing, and not like a fun endeavor. You are maybe asking now, “How do I get a life insurance policy for my mortgage? “Well, here is some positive news: it is not as hard as you would imagine. Much of it would be taken care of by the financial institution or insurance firm.
What kind of mortgage-connected life insurances are offered?
A very popular form of mortgage life insurance is group credit life insurance. In Japan, they have this as a insurance covering just mortgages. It is voluntary in some cases. Sometimes though, this is a requirement. There is a significant anomaly of Flat 35 which does not ask for it.
There’s private life insurance, too. This is accepted by a handful of lenders in place of group credit life insurance. Or, even if this is not necessary, onev may choose it to secure their family and/or themselves.
Talk to your adviser about the forms of less expensive private coverage offered to expats.
Home Loan Pre-Application/Pre-Qualification Process
Your bank is likely to have a group credit life insurance scheme that they like you to be part of. In the majority of instances, you will need to know Japanese language to some extent. This is needed since they have to check the contract together with you and be certain you are aware what you are going into. Then you may put in your name, address, and other info on the applications in the required language.
You’re going to have a health insurance card. In certain cases, you can need to get a medical check-up, especially if you have more years behind you. The outcome of your checkup will be forwarded to the financial institution. On the foundation of it, the financial institution will decide if you’re eligible to take part of the group’s life credit insurance scheme.
The 3 Great Diseases
Here are some interesting titbits of info. Were you aware that people in Japan like to make Top three lists? For instance, you have the “3 Great Cities”: Tokyo, Osaka, and Nagoya, or the “3 Holy Mountains”. There are the 3 sacred mountains: Mt. Fuji, Mt. Haku, and Mt. Tate. But were you aware that Japan even has a “3 Great Illnesses” list? These include acute myocardial infarction, cancer, and stroke.
The 8 Great Diseases
There are also the 8 Big Diseases. Actually, they state the above mentioned 3 illnesses, so we will just mention the other 5: diabetes, chronic pancreatitis, chronic kidney disease, hypertensive disease, and cirrhosis.
What if I have a “big disease”?
Well, after you actually first go to the hospital, not the bank, you will find out that life insurance isn’t the easiest feat to obtain. Some of the options are joining the special group credit life insurance policy referring to the 8 big diseases. There is a special term for this policy in Japanese. Still, your odds aren’t that good, since in some instances you can’t join the policy if you have a previously existing medical condition. In that case, ask the bank about joining a private life insurance policy. Whatever the outcome is, you will probably have a more costly mortgage.
So I am eligible for the insurance and I was vetted in the pre-application/pre-qualification. What do I do?
The following phase is to speak to your verified property broker, locate the property, and apply for a mortgage. If you succeed, if you got standard group credit life insurance, you may not even get the premiums. Rather, they’re only going to be counted in the interest on the loan. But, if you got a previously existing condition/special arrangement, this will probably bring you some additional expenses.
It’s a smart thing to secure your mortgage, of course. It’s the greatest financial responsibility you’re going to have during your lifetime, for the amount of capital you don’t possess in the account. For starters, it saves your closest ones from ending up without their house if you die or become disabled to the extent you can’t hold a job. In addition, financial institutions also have to defend their interests from risks. Insurance is typically a group credit life insurance schemes. But, it can sometimes be private life insurance, and if you got the opportunity, you can probably check out more optimal low-cost foreign insurance options on offer. Policies vary from one financial institution to an other. If one has a serious disease, it can become harder to obtain a regular group life insurance policy. But, alternative (and more costly) policies are to be found if this occurs.